Trade subsidies, export bans and price stabilization: Lessons of Bangladesh-India rice trade in the 2000s

Model simulations show that a relatively small increase in private consumer stocks equivalent to about 2 weeks of normal consumption could account for the large surge in domestic prices in Bangladesh and that an additional 300,000 tons (in addition to approximately 700,000 tons of net rice distribution that actually occurred) would have been sufficient to stabilize prices in the November 2007-April 2008 period. The Bangladesh analysis thus shows that in spite of the uncertainty in international markets, careful planning, timely interventions and openness to trade can substantially reduce requirements for public stockholding.